Toyota in a jeopardy over the recall

Toyota recalled millions of vehicles for defective functioning and it sees a grave danger in the sale in 2010. The hit will be severe for Toyota in the US wherein the company has withdrew 8 most popular models last week on the basis of accelerator pedal snag. But the company expects the reversal of fortune, that the recall may impede sale increase in the future. The VP of the company expressed fears over the fall in the sale due to recall and the figures in January was alarming. The sale report for the Q3 will be revealed on Thursday, he said. The slippery floormats and accelerator snag costed the company to recall 8.1 million of its vehicles, which overtook the net sale in the last year.

The snag is a freak one, according to the company, and the company is on the verge of reviving the confidence from the customers. The VP said this has been the first such instance from Toyota in the history of the company. No official response to the accidents and casualties has been made from the company sources. But the President of the company(grandson of the founder) made an apology in Switzerland last week. In the US, the company’s head offered apology and regrets over the ongoing events.

Toyota has made initiatives to rectify the faults in more than 4.2 million of its vehicles running in North America and Europe. The defect will be corrected with a small metal shim, or spacer thereby preventing the stickyness. From the next week, the resurgence process will start for Camry, Corolla, and Rav4 in addition to other 5 models. It is to be remembered that the production at six plants in the US and Canada came to a grinding halt after the defect prone information. By the existing situation, the company is closely monitoring the developments with regard to the sale in the 2010. Prior to this debacle, the company foresaw a growth of 6% in the sale but the recall might cost the company about 100-200 billion yen. The costs, by way of both direct and indirect, may be a positive one to analyse the exact situation, said an analyst from Japan.

Toyota’s share shot by 4.5% due to the recall measure in the US as the earlier downfall by 18% in the last week succumbed to the market capitalization around %20 billion. In the meanwhile, Toyota faces an uphill task of dealing the law suits and damages in this regard. Many drivers of the vehicles went ransacking in claiming the damages for not rectifying the defects on time.

But the observers see the lawsuit as the element of litigation against Toyota. The claims include resale value and casualties including death. The problem cannot be solved in the near future, say analysts, and Toyota would face a tough phase in easing the situation. The grave situation of Toyota alerted GM, Ford and Hyundai to capitalize on by offering discounts and other privileges to the Toyota customers.

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